The Great Depression Flashcards
weaknesses of the boom
modern technology only helps big businesses, inequalities in pay, end of war time boom, competition for jobs, lack of government regulation eg poor working conditions and lack of trade unions, strikes, violence, riots, demand for older industries in decline, machines replace workers = lower wages and overproduction
President 1928
Herbert Hoover republican
Bull market
Bear market
more buyers than sellers of shares
opposite
share holders 1920 vs 1929
4 million to 20 million (US population 120 mil 1929)
speculators
a form of gambling. borrowing money to buy shares and sell them as soon as price rises. Many speculators were women. banks did speculation as well. by 1928 speculation took hold and demand for shares was the highest ever
‘on margin’
put down 10% needed to buy the share and borrow the rest
Signs of weakness of the American economy 1929 (6)
downturn in a reliable construction industry since 1926
500 banks failing per year 1920s
surplus of goods
only the rich get richer
an increase in marketing but no increase in demand
American goods expensive in Europe because Europe also tariffs American goods
Black Tuesday
Oct 29 1929 worst day in stock market history. $15 billion lost on that day. $50 billion lost by the end of the month
bank run
rushing to withdraw deposits at the bank. leads to 9000 banks closing by 1932
summary of great depression
overproduction and underconsumption killed the economy. too much produced that consumers could not buy and too much money spent on unproductive purposes like speculating.
percentage families earning less than $2000 annually and why
2/3. business owners enjoyed profits without raising wages of workers.
USA 1929-32
dropped almost 27%
25% unemployed
Federal Reserve during great depression
manages money supply and interest rates. reduces money supply by 1/3 between 1929-32 to curb inflation
Impact of European economy on American goods
not fully recovered from WW1
buying less from US as economies are improving
UK, France, and Germany still heavily indebted after war
Causes of the Wall Street Crash
tariffs on European goods
overproduction and wealth gap
speculators
small investors cannot pay back loans if share prices fall
Spark of the Wall Street Crash
experts lost confidence in the economy and sold shares making share prices fall. everyone panicked to sell shares as the share prices fell
Consequences of the Wall Street Crash
downturn in spending
many bankrupted
banks failed because people withdrew all their money
by 1932
14 million unemployed
5000 bankrupt banks
agriculture prices low and income drops
USA international trade decreases by $7 billion
almost 25% unemployed
struggling farmers
farming fell from $6 billion to $2 billion
farmers that had mortgages were unable to pay making 1/3 lose their land
farmers move to the city instead
drought affecting in the east
dust storms and black blizzards
struggling from competition outside USA
Farm labourers competing against machines
Small Farmers lost the most
effect on cities
many farmers migrate to cities
not enough food - soup kitchens set up
Bonus Marches
20,000 WW1 veterans marched on Washington to get the bonus money they were supposed to receive in 1945 for serving in the war sooner. This ended in 100,000 given to marchers to go back but some stayed and protested. Hoover ordered in the army and tanks. 100 injured a child killed. Hoover’s reputation was down in the dumps. veterans seen as communists and criminals
Hoover’s response
Reconstruction Finance Corporation $500 million loans for banks. 1.2 billion authorised for first 6 months
Emergency relief act July 1932. $300 million to RFC and $1.5 billion to construction projects.
no direct relief for struggling citizens
tried to convince people that there would be an economic rebound to get more spending going
too little too late
1932 election
46/48 states won by fdr 472 v. 59 electoral votes
25% unemployed 1932
people lost all faith in Hoover and shanty towns were called Hoovervilles
violence to bonus marchers
FDR promises change and “A New Deal” for the American people and uses government money as opposed to Hoover
